Premiums to go up as much as 25 percent under health reform

Andrea K. Walker, The Baltimore Sun

Marylanders who buy health insurance on a state exchange under health reform could see their premiums jump as much as 25 percent under rates approved by state regulators, but those increases are less than insurers sought.

Maryland Insurance Commissioner Therese M. Goldsmith approved premium increases Friday for nine insurance companies who applied to sell plans to individuals through a state exchange, called Maryland Health Connection, established under health reform.

The rates were significantly lower than what insurance companies had requested, but still higher than the 6 percent to 7 percent annual premium increase that is typical across the country. Insurers said they were seeking the increases to cover the uncertainty of new costs associated with health care reform.

The full impact of Goldsmith's decision is not known because it is not certain how many people will buy insurance from the exchange. The rate increases would not affect most people who purchase insurance through their jobs, but there are many others who buy insurance individually or who are uninsured who will be able to buy from the exchange.

Maryland Health Connection estimates 180,000 people will buy from the exchange for 2014. They largely will come from the 146,078 Marylanders who currently buy in the individual market and from the estimated 740,000 uninsured people in the state.

The rate review process was scrutinized by critics who thought insurers were seeking exorbitant hikes. Goldsmith approved increases as much as 33 percent below what insurers asked. The commissioner said she sought to balance the needs of both consumers and insurers.

"The rate review process is designed to test data and assumptions underlying proposed rates and to ensure those rates are neither excessive nor inadequate," Goldsmith said in an email through a spokeswoman.

Supporters of the Affordable Care Act acknowledged rates would go up, but also said consumers will get plans with better coverage.

"A lot of the lower rates have been a result of people having really poor coverage with high deductibles with really minimum coverage," said Vincent DeMarco, president of the Maryland Citizens Health Initiative. "Everybody is going to get full coverage now. When you have coverage with a $5,000 deductible, you basically have no coverage."

Maryland Attorney General Douglas F. Gansler said the rate increases still were too high given the uncertainty of what will happen when health reform is fully implemented Jan. 1. Nobody knows how many people will sign up for insurance or how much more it will cost the system, if anything, he said. Gansler had proposed capping rate increases to no more than 5 percent.

"It certainly seems that insurance companies are taking advantage of the Affordable Care Act coming down the road and using that to be greedy at a time when we don't know if it will cause costs to go up or lower costs," he said.

Rep. Andy Harris, who opposes the health reform law, said the premiums demonstrate that "Obamacare will in fact lead Marylanders to pay more for their health care. It is hardly welcome news for young Marylanders who are already struggling in this economy to say their health insurance will still go up under Obamacare, but not as much. Despite promises by President Obama and others that this law would lead to lower premiums, the exact opposite is turning out to be true — Marylanders will be paying more."

The highest rate increase of 25.4 percent was granted to Aetna Life Insurance Co.. The rate was 29 percent lower than the insurer sought. Aetna also recently bought Coventry Health.

Walt Cherniak, a spokesman for both companies, said the insurer still was reviewing the recommendations before commenting.

There is an appeal process if insurers don't like the commisioner's decision.

Kaiser Permanente of the Mid-Atlantic States had the lowest premium increase at 4.3 percent, about 1 percent less than it requested

"[We] worked with Maryland officials to ensure our 2014 rates are as consumer friendly as possible," the company said in a statement. "We believe all residents should have access to high quality, affordable care, and we're confident our rates reflect that."

CareFirst BlueCross BlueShield, the state's largest insurer, wanted to raise rates an average of 25 percent on those who buy coverage individually. Goldstein approved increases of 11.3 percent, 15.4 percent and 12.1 percent for various CareFirst insurance brands.

CareFirst, which has 2.2 million customers in Maryland, about 48 percent of the market, said in a statement that the commissioner's rate adjustments were "modest" and that its plans under the exchange "are competitively priced."

"We look forward to the launch of the exchange this fall," the statement said.

Three insurance companies are newly formed, so comparisons with past rates weren't possible.

CareFirst and other insurers said that they needed to charge more because it would be costlier to cover the sicker people who will come on the rolls. Under reform, insurers will no longer be able to deny coverage to people with pre-existing conditions, a practice some have said has helped keep costs down.

Chester "Chet" Burrell, CareFirst's CEO, was not available for comment Friday, but he has argued that it is hard to predict the costs the company would face because nobody knows how many people will sign up for coverage. The insurer took that into consideration in its request.

Advocates of reform have argued that ultimately costs should go down as more people are required to buy insurance.

"You'll spend more on the premiums, but you'll spend less out of pocket," said Brad Herring, associate professor of health economics at the Johns Hopkins University.

Health Secretary Joshua M. Sharfstein said he thought Goldstein struck a good balance between making sure consumers aren't gouged and taking into consideration increased costs insurers will face.

"Her review was both thoughtful and thorough and her actions will help protect consumers," Sharfstein said.

An analysis of the rates by Maryland Health Connection found that Maryland residents will pay premiums that are among the lowest of 12 states that have passed or proposed insurance rates for their exchanges.

In New York, a 50-year-old resident will pay about $319 a month for a Silver, or midlevel plan, while a Maryland resident will pay $260 to $269 for a similar plan, or about 18 percent less, the report said.

The Maryland Health Benefit Exchange, which runs Maryland Health Connection, will now begin a certification process to make sure plans sold on the state exchange meet requirements of health reform.